Determine the IRR on the following projects:
a. Initial outlay of $35,000 with an after-tax cash flow at the end of the year of $5,836 for seven years
b. Initial outlay of $350,000 with an after-tax cash flow at the end of the year of $70,000 for seven years
c. Initial outlay of $3,500 with an after-tax cash flow at the end of the year of $1,500 for three years
Answer:
Using a financial calculator
a. N=7, PV=-35,000, PMT=5,836, FV= 0, solve for i=4.02%
b. N=7, PV=-350,000, PMT=70,000, solve for i=9.2%
c. N=7, PV=-3,500, PMT=1,500, FV= 0, solve for i=13.7%
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